Saturday 30 May 2015

Fifa's finances - where does all the money come from?

Details of Fifa's sponsorship arrangements are opaque. But estimates have been made about some of its deals with the world's biggest companies.

- ADDIDAS 186m pounds extended sponsorship until 2014

- COCACOLA Signed 290m pounds deal in 2005 until 2012. New deal until 2022

- HYUNDAI extended deal to 2022 last year at the cost of 182m

- GAZPROM 65m pounds 2018 Russian world cup only, between 52m & 65m for four years deal

- VISA signed an eight year deal in 2006 worth 85m pounds

- SONY has been a FIFA sponsor for the eight years to end in 2014. In a deal worth over 222m pounds

- EMIRATES paid 118.3m pounds in 2006, left december 2014
  
    

Fifa has come under mounting pressure from its sponsors in the wake of the investigation of 18 people over alleged bribes totalling more than £98m.
The strongest words yet have come from Visa, which - unlike other Fifa partners - threatened to pull out of its deal. This is believed to be worth £85m over six years. The company said "we have informed them that we will reassess our sponsorship" unless Fifa makes changes.
Every one of Fifa's major sponsors has criticised the governing body, with the notable exception of Gazprom. The Russian energy giant is a sponsor for the 2018 World Cup in Russia. A spokesman said the arrests “doesn’t influence” the Russian gas producer’s sponsorship agreement for the World Cup in 2018. This is not the first time that Fifa's sponsors have called for reform or had to criticise the organisation - in 2011, Coca-Cola, Emirates, Adidas and Visa have all expressed concern when allegations of corruption emerged from within the organisation.
The governing body has had a rough 12 months: Fifa partners Sony and Emirates, the airline, both declined to renew their contract as sponsors in November 2014. Sony's contract was worth an estimated $280m (£183m) over eight years, and Emirates is believed to have paid £118.3m over eight years. Emirates decided not to renew its deal beyond 2014 because the terms on offer “did not meet expectations”.
Second-tier 'sponsors', Castrol, Johnson & Johnson and Continental Tyres, all abandoned the governing body in January 2015.
Sponsors must weigh up whether being connected to Fifa's increasingly toxic brand is worth the profile that the relationship can provide.
Brand Finance, an intellectual property management company, argues that these big brands could lose up to $1bn (£653m) in value due to the reputational damage of being associated with Fifa.
Chief executive of Brand Finance David Haigh said: “Sponsors have partnered with Fifa in order to build their brands, not have their reputations tarnished. The kind of activities that are alleged to have been going on could destroy billions of dollars of brand value.
"A lot depends on what happens in the next few days but without knowing how quickly Fifa are going to clean out the Augean stables, my recommendation to the major sponsors would be to move towards the exit."
Nevertheless Fifa's revenues are healthier than ever: between 2011 and 2014, Fifa made total revenues of $5.7bn (£3.7bn); in 2014 alone - a World Cup year - the governing body made $2.1bn (£1.4bn).

Fifa makes $177m (£116m) a year from marketing deals with top-tier partner brands, which currently include Visa, Hyundai, Coca-Cola and Adidas.
The governing body does not disclose how much it is paid by sponsors, but the figures below provide a rough estimate.

Company
Estimated deal with FIFA
Visa
Signed an eight year deal in 2006 worth £85m
Adidas
Signed a eight year deal in 2005 for £186m
Coca-Cola
Signed an eight year deal in 2005 for £290m
Hyundai
Signed a 12 year deal in 2010 for £182m
Second-tier sponsors are believed to have paid between $10m to $25m (£6.5m to £25m) for four-year deals relating to the World Cup. These brands include McDonald's and Budweiser's parent group Anheuser Busch InBev, Brazilian telecommunications company Oi, Brazilian food processing company Seara, and Chinese solar energy company Yingli Solar.
Russian energy giant Gazprom is estimated to have paid between $80m and $100m (£52m to £65m) to become a Fifa partner for the 2018 World Cup.

Hover over the sectors to see the figures
Fifa makes most of its money by selling television rights to the World Cup. Other revenue streams come from selling hospitality rights, licencing the brand name, such as in Fifa's video games, ticketing and investments.

Hover over the sectors to see the figures

Fifa's balance sheet as of December 31, 2014
Amount
Assets
$2,932m
Liabilities
$1,409m
Reserves
$1,523m
It is unclear exactly what Fifa spends all of this money on (although it did spend a reported £16m on the badly-reviewed film United Passions).
John Whittingdale, the Minister for Culture, Media and Sport, told the House of Commons: “A change of leadership of Fifa is very badly needed.
“This is merely the latest sorry episode that suggests that Fifa is a deeply flawed and corrupt organization.
“It’s important that other sponsors reflect on their links to Fifa and consider following Visa’s lead."

Sepp Blatter (Getty)
Matt Powell, an analyst at NPD Group, a market research company told Bloomberg: “Certainly this tarnishes the Fifa brand.
“I expect that sponsors will show restraint until the story plays out a bit more. Once they know that convictions are in and understand the extent of the crimes, then sponsors will act.”

Who has said what?

In a statement, Visa said:
Quote Our disappointment and concern with Fifa in light of (Wednesday's) developments is profound. As a sponsor, we expect Fifa to take swift and immediate steps to address these issues within its organisation. This starts with rebuilding a culture with strong ethical practices in order to restore the reputation of the games for fans everywhere.
Quote Visa became a sponsor of Fifa because the World Cup is one of the few truly global sporting events with the power to unite people from around the world through a common love of football.
Quote Our sponsorship has always focused on supporting the teams, enabling a great fan experience, and inspiring communities to come together and celebrate the spirit of competition and personal achievement - and it is important that Fifa makes changes now, so that the focus remain on these going forward. Should Fifa fail to do so, we have informed them that we will reassess our sponsorship."
South Korean car manufacturer Hyundai issued a strongly-worded statement which stopped short of threatening to end their deal:
Quote As a company that places the highest priority on ethical standards and transparency, Hyundai Motor is extremely concerned about the legal proceedings being taken against certain Fifa executives and will continue to monitor the situation closely."
Coca-Cola said:
Quote This lengthy controversy has tarnished the mission and ideals of the Fifa World Cup and we have repeatedly expressed our concerns about these serious allegations.
Quote We expect Fifa to continue to address these issues thoroughly. Fifa has stated that it is responding to all requests for information and we are confident it will continue to cooperate fully with the authorities."
A spokesman for McDonald's, a second-tier sponsor, said:
Quote McDonald's takes matters of ethics and corruption very seriously and the news from the US Department of Justice is extremely concerning. We are in contact with Fifa on this matter. We will continue to monitor the situation very closely."

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Adidas said it was "fully committed to creating a culture that promotes the highest standards of ethics and compliance" and expects the same from its partners.
Dr Roger Barker, director of Corporate Governance of the Institute of Directors, said:
Quote The large multinationals who pour hundreds of millions of pounds of sponsorship into Fifa’s coffers every year cannot turn a blind eye to the gross failures of corporate governance at the organisation.
Quote These sponsors rightly make great efforts to ensure their own boards

 
       

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